MALAYSIA’s public healthcare needs are bursting at the seams and available tax funds are not enough to meet the growing demands as cost of care keeps increasing. Adding to the challenge is the country’s current high debt level and economic downturn.
Hit against a brick wall, Health Minister Datuk Seri Dr Dzulkefly Ahmad announced in late March the setting up of a seven-member Health Advisory Council to look into public-private partnership (PPP) initiatives to meet Malaysia’s healthcare needs. He also indicated recently that the government is looking into a national health insurance scheme to get more funding to beef up healthcare delivery.
Some stakeholders, however, are urging the government to plug the tax loopholes, so that more funds can be retained and used for the country’s healthcare needs, as well as examine the areas of conflict of interests affecting public healthcare delivery.
One is Parti Sosialis Malaysia central committee member Dr Michael Jeyakumar Devaraj, who says that Federal allocation for the Health Ministry has actually gone up in tandem with the country’s gross domestic product (GDP) – from RM14.76bil in 2010 to RM26.53bil in 2018 (Federal budget estimates, Finance Ministry). This represents a 49% increase in real terms (after discounting for inflation) between 2010 and 2018 but technological advancements in diagnostics and treatments have inflated the costs of treatment at an even faster pace.
As a result, he says, the ministry does not have sufficient funds to expand its services to provide the newer modalities of treatment in a comprehensive manner. Patients also face a long waiting time, delays in investigation, diagnosis and treatment outcomes, rising cost of co-payments, lack of specialists and catastrophic expenditure, he adds.
Dr Jeyakumar was speaking at the first People’s Health Forum roundtable discussion in Kuala Lumpur recently, titled “How the private sector can be leveraged to provide healthcare to the B40 and M40?”
The roundtable is the first of a series of four roundtables being organised to pool information and analyses of public-private partnerships, continuing out-migration of specialists from the public sector, health care financing, and migrant health.
Noting that the World Bank and the International Monetary Fund have recommended the PPP approach to address the shortfall in healthcare funds, Dr Jeyakumar, however, expresses concern that neo-liberal solutions are generally recommended, where charging people for healthcare is deemed good as it will encourage people to adopt a more healthy lifestyle.
He also points to a recent Harvard study funded by the World Bank, which recommends that the government devolves more of its healthcare functions to market players while it focuses on regulation.
“None of these external ‘experts’ advise how developing countries could strategise to retain a larger share of the wealth that we are producing, but which is expropriated by the huge multinational companies that dominate the global supply chains,” he says.
The liberalisation of the financial sector has made it more difficult for the government to collect taxes from the top 0.01% super-rich of society, resulting in many nations facing budgetary constraints, he adds.
In Malaysia, the corporate tax rate was 40% until 1988 but it was gradually reduced to the current 24%, and the government has indicated that it will be brought down further to compete with Singapore’s 18% and Thailand’s 19% rates.
“There is competition among countries to cut down corporate tax and attract investors and the tax collected is not enough to fund developmental projects for the people,” he says, noting that this has led to many countries, including Malaysia chalking up huge sovereign debts.
Contributing further to the fund shortage is the worldwide trend of keeping budget deficits to below 3% of the GDP.
Another issue is tax evasion by business owners who resort to various tactics to avoid paying taxes, including royalty payments and scheme transfer pricing - so that profits made in a particular country are repatriated to a tax haven through grossly exaggerated fees.
Tactics like these should be made illegal and tax loopholes need to be closed, Dr Jeyakumar stresses.
“Countries undercutting one another will end up killing one another. Country leaders should negotiate for an increase of corporate tax at the regional level. The increase will boost the economy and the region will benefit.”
This is generally supported by the forum with some saying that the government should also look into a more progressive taxation system and review our taxation laws.
Conflicts of interest
Health policy analyst Dr Chan Chee Khoon raises the issue of government agencies at the federal and state levels having controlling stakes in major for-profit healthcare enterprises.
While government-linked companies (GLCs) built up their stakes in the commercial healthcare sector, a succession of health ministers had argued that Malaysians who could afford it should seek private healthcare services as this would allow the government to target its limited healthcare resources on the “really deserving poorer citizens,” he says.
“Seen in that light, ‘targeting’ can therefore also be the persuasive face and generic template for the commercialisation of essential social services,” says Dr Chan, who presented “State and Healthcare in Malaysia: Provider, Regulator, Investor” at the forum.
He cites the example of Kumpulan Perubatan Johor, a large diversified healthcare conglomerate which includes the largest chain of private hospitals (26) in the country, spawned by the Johor state government through its corporate arm the Johor Corporation.
Another is the IHH Healthcare Bhd, the healthcare subsidiary of Malaysian federal government’s sovereign wealth fund Khazanah. It emerged as the second largest listed private healthcare provider in the world - (by market capitalisation, US$8.06bil (RM33.5bil) – when it added Turkey’s largest private healthcare group Acibadem to its recently merged Parkway-Pantai chain of private hospitals in Malaysia and Singapore.
That means, the government, through GLCs at federal and state levels, own and operate three parallel systems; the Health Ministry facilities, corporatised hospitals (National Heart Institute, university hospitals) and IHH chains of commercial hospitals, says Dr Chan, calling it a conflict of interest affecting public healthcare delivery.
As he puts it, GLCs now control more than 40% of “private” hospital beds in Malaysia.
“How are conflicts of interests playing out, as the state juggles its multiple roles as funder and provider of public sector healthcare, as regulator of healthcare system and as pre-eminent investor in the private health services industry?” he says.
Questioning if the public sector will suffer if Khazanah comes under pressure to secure commensurate returns from its costly acquisition of private healthcare assets, Dr Chan asks, “What safeguards will be put in place for impartial regulation, given the potential for regulatory conflicts of interest in the healthcare subsectors?”
The attempted acquisition of the National Heart Institute by Sime Darby in 2008 is a revealing instance of disparate priorities, he says.
“There is little evidence that the state is exercising its ownership prerogatives in commercial healthcare enterprises to pursue a balance of social versus pecuniary objectives, beyond cosmetic CSR initiatives.”
Dr Chan also notes the continuing poaching of staff from the public sector which exacerbates the already burdensome workload of its remaining staff.
Concurring,Dr Jeyakumar says allowing too many private hospitals to mushroom has resulted in specialists in the public sector being pulled away.
“When we bring in the private sector to play a bigger role, we must be aware how it will impact other aspects of healthcare,” he says.
Hence, it is important for the government to scrutinise the PPP projects that it wants to take on, and consider the impact it has on public healthcare sector, adds Dr Jeyakumar.
Dr Chan says GLCs should be reoriented to become a source of high quality, no frills, medically necessary care at medium cost, to act as a price bulwark to rein in escalating, exorbitant charges in other commercial healthcare enterprises.
The crucial role for the government should include an oversight and regulation of an evolving system of healthcare provision and financing such that all Malaysians and other eligible beneficiaries continue to enjoy access to equitable healthcare on the basis of need, and not ability to pay, which is a de facto human right to healthcare, he adds.
Instead of a national health insurance, he says an alternative option which relies on a more progressive taxation regimes to improve universal access to quality care on the basis of need should be considered as it is notably absent from the options under consideration.
Reducing cost inefficiency
One way to manage healthcare cost better is to have a primary care physician to diagnose and treat patients at at the clinic level. But most Malaysians do not have one, and have to “shop” around by going to government clinics, private GPs and private specialists and this affects continuity of care and inhibits interventions to promote health and prevent disease, says Dr Jeyakumar.
Malaysia’s treatment oriented approach results in poorer outcomes and less cost effective treatment for non-communicable diseases (NCDs), he adds.
According to Malaysian Medical Association’s Private Practice Section chairman Dr R. Thirunavukarasu, the government can offload some of these patients who go for outpatient treatment in government hospitals to some of the underutilised 7,000 GPs nationwide who can monitor the patients’ NCDs.
Academy of Family Physicians of Malaysia president Assoc Prof Dr Mohammad Husni Jamal believes GPs must go through some courses to beef up their expertise as a generalists, like it is done in Britain, which then reduces unnecessary costly specialists’ attention.
To ensure GPs do a good job, he says they should be active at the community level and made to answer to their state health directors.
Getting GPs to play a role in screening patients for NCDs is welcome as an acceptable form of PPP while the government can buy some services from the private sector depending on the price, he says.
However, there are lessons to be learnt from the past on leaving healthcare matters in the hands of the private sector, says Dr Jeyakumar.
Privatisation of hospital construction for instance, has increase costs due to poor quality of work, many technical problems and delays in completion of projects, he notes.
Dr Chan cautions that in a profit-driven risk-rated insurance scheme, the people who need healthcare most, cannot access it.
The case of MySalam insurance for the B40 low income group excluded those with pre-existing conditions such as Alzheimer's, cardiomyopathy (heart disease), coma, if a patient is diagnosed before Jan 1, he says.
Dr Chan, who is also involved with Citizens’ Health Initiative, says that the Health Advisory Council should include laypersons and representatives of civil society organisations.
Crucially,the government can carry out PPP projects to meet the healthcare needs of the nation but it should consult with stakeholders first, says Dr Jeyakumar: “It should also carry out a pilot study to analyse the results before implementing them.”
Malaysian Pharmaceutical Society president Amrahi Buang agrees, sharing that in the community, pharmacists are among the first to respond to symptoms, with patients going to them fist to purchase medicine to address their ailments.
So it is important to also consider the role of pharmacists in healthcare, he says.
Besides careful adoption of PPP, some in the forum say more efforts have to be made to move Malaysians towards adopting a healthy lifestyle from a young age so that they grow old with less health problems that wipe out their life savings.
As Amrahi puts it, there is a need for a national health policy for the country to move forward - one that will push it towards preventive care, rather than curative.